With over 32,100 ETH burned since the London Upgrade was activated, it’s starting to look like miners earnings won’t be too highly after all, as fee rewards on NFT transactions increase 75% since the fork.
The London Upgrade contained 5 proposals, with one of the most interesting being EIP 1559, which was designed to simplify transaction costs, splitting the gas fees into two elements, being a base fee (which gets burned) and a priority fee, which is paid directly to miners.
With the base fee being generated based on the height of the previous block, and which is designed as a dynamic fee which increases when demand is high, and reduce when demand drops, the amount of ETH burned since the London upgrade has reached a staggering $100M in just the first week.
Initially miners were overall against the proposed change due to concerns that it would reduce their earnings, but with the CovidPunks NFT selling out on the same day as the London upgrade came into effect, ETH gas prices hiked around 400% in the space of just one hour. Also, since the activation of the hard fork, over 7000 ETH have been paid in priority fees, worth roughly $22M.
ETH burned since the London Upgrade leads to a deflationary Ethereum
The ETH burned since the London upgrade, and of course all the tokens which will be burned in the future do make Ethereum into a deflationary currency, and this of course is likely to increase the value of each individual token over time, and overall this is likely to assist miners in revenue generation in the long run, as the deflationary nature of the token starts to bite, which reduces the supply side (and thus having a positive price-action effect by increasing demand).
In the first week since the fork, roughly half the fees which would normally have been collected and distributed to miners has in fact been destroyed through the burning process. The upgrade also doubled the maximum Ethereum block height, meaning Blocks can now contain up to 30 million in gas, rather than the previous limit of 15 million. This increase is designed to have a positive impact during periods of high demand, however the base fee has been created ultimately to help keep the average block size around the 50% mark.